Germany's National Deficit Rises to Nearly 119 Billion Euros

In 2024, Germany's government experienced a significant increase in its national deficit, which reached approximately EUR118.8 billion, marking a EUR15 billion rise compared to the previous year. This trend reflects a scenario where government expenditures surpassed revenues, despite an overall increase in tax income.

The deficit corresponds to a ratio of 2.8% of the country's gross domestic product (GDP), a slight increase from 2.5% in 2023. Notably, Germany has managed to remain within the confines of the European Union's fiscal guidelines, which permit a budget deficit of up to 3.0% of GDP.

Germany's financial situation was positively impacted by rising revenues that exceeded EUR2 trillion for the first time in 2024. However, the federal government bore the brunt of the deficit, accounting for over half of the total at EUR62.3 billion. While the federal government managed to reduce its deficit by EUR30.5 billion due to increased tax revenues, the deficits of the federal states and municipalities grew considerably.

Moreover, the social insurance system reported a deficit of EUR10.6 billion in 2024, a stark contrast to the EUR9 billion surplus it recorded in the previous year. This marked the first instance since 2009 where the federal government, states, municipalities, and social insurance all reported deficits simultaneously, highlighting a concerning trend in public finances.

As Germany grapples with economic challenges and the imperative to allocate more funds for defense, discussions surrounding potential adjustments to the country's debt brake have intensified. Implementing reforms to the debt brake, a constitutional provision designed to limit public borrowing, would require a two-thirds majority in the Bundestag, making any changes a complex political endeavor.